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IFA Insider, Volume 12, Issue No. 1, Monday, January 1, 2007

FORMER US HOUSE SPEAKER GINGRICH TO ADDRESS IFA CONVENTION

Former US House Speaker Newt Gingrich, who led the 1995 Republican Revolution to capture the majority in the US House of Representatives after 40 years of Democratic Party rule, will address IFA’s 47th Annual Convention in February. A possible contender for the presidential nomination in 2008, Gingrich will share his views of the current political climate in Washington, DC and comment on specific policy issues and national trends that affect small business and franchising.

The Feb. 24-27 gathering at Caesars Palace will provide attendees the opportunity to learn the latest in international development, financial growth strategies, technology investment, recruitment and methods of assessing franchise candidates interested in becoming small-business owners.

To learn more or to register for the annual convention, visit Franchise.org.

IFA, COMMERCE DEPARTMENT INK FORMAL PROMOTION AGREEMENT

An agreement between the US Department of Commerce’s US and Foreign Commercial Service and IFA to foster, promote and facilitate the expansion of American franchise systems was recently signed by IFA Pres. Matthew Shayand US Commercial Service Regional Director for Europe John D. Breidenstine.

With offices across the nation and in more than 80 countries, the Commercial Service utilizes its global presence and international marketing expertise to help US companies sell products and services worldwide.

The IFA International Development Department, headed by Vice Pres. Marcel Portmann, helps franchise companies develop and expand their international operations. The department achieves this mission by providing technical assistance and information, along with organizing and supporting franchise trade missions and US pavilions at selected franchise exhibitions outside the United States. IFA’s international programs and services provide a cost-effective means for franchise systems to explore foreign markets and expand globally, foster greater understanding of global markets and promote franchising abroad.

The association’s international department includes the Global Marketing Committee, which is responsible for directing overseas franchise development support and information services; the Franchise Trade Mission Task Force, which coordinates trade missions through Commerce Department programs, and the International Affairs Network, a group of 300-plus franchise executives from around the world interested in global franchise expansion.

IFA also conducts workshops concerning international issues during its annual convention and other events throughout the year, including the biennial International Symposium on Franchising, designed to assist franchise systems in enhancing their global development strategies and tactics.

Twelve years of Republican majorities in Congress ended early Dec. 9, but not before the US House of Representatives and Senate wrapped up work on a package of important tax extenders. These measures included several key items affecting the franchising business community. Congress extended the 15-year depreciation schedule for leasehold and restaurant improvements retroactively for 2006 and through Dec. 31, 2007. While this provision did not extend the 15-year depreciation to new construction as many had hoped, it is likely that Congress will have an opportunity to consider the treatment of new construction in any tax relief package accompanying the minimum wage legislation anticipated in early 2007.

Another key element of the end-of-session tax package bill combines the Welfare to Work credit program with the Work Opportunity Tax Credits and extends these credits for an additional two years through the end of 2007. The programs provide an incentive to hire individuals from targeted groups that have a particularly high-unemployment rate or other special employment needs. WOTC, for example, provides up to $2,400 per year federal income tax credit to employers against the wages of certain disadvantaged workers, including former welfare recipients. This allows employers to offset some of the costs of training and retaining disadvantaged workers.

In addition, Congress approved a significant expansion of health-savings accounts. The bill increases the limits on annual contributions to $2,850 for individuals and $5,650 for families. Workers can now contribute the full yearly amount, regardless of whether they start the plan in the middle of a year; and it adjusts the rules for contributions to lower-paid employees so companies can contribute larger amounts to plans for these workers.

On Nov. 28, IFA commended US Rep. Randy Kuhl(R-NY) for removing his co-sponsorship of HR 1696, a union-backed bill that would make union organization of the workplace easier. The bill, known as the Employee Free Choice Act, would mandate a process called “card check,” that would prohibit the present practice of secret-ballot elections, as the procedure for determining whether to unionize a workplace. IFA believes that card check, or the system of a majority of employees signing union cards, places employees and employers at the risk of coercion and fraud. While HR 1696 had a near-majority of supporters in the US House of Representatives, it was not expected to be addressed by the full Congress in the dwindling days of 2006. Kuhl’s action was, therefore, a bold, largely symbolic move. IFA appreciates the congressman’s stand for employees’ ability to continue to freely and confidentially determine whether union representation is right for them.

The Employee Free Choice Act is expected to be reintroduced in 2007, and is a key element of the Democrats’ labor policy for the 110th Congress. IFA and a coalition with other small-business associations will work together, with the help of IFA members, to defeat this measure.

SEN. WYDEN UNVEILS BROAD HEALTH-CARE INSURANCE REFORM PACKAGE

Sen. Ron Wyden(D-Ore.) revealed a new proposal to guarantee coverage for all Americans, including the estimated 47 million uninsured Americans. Under the proposal, employers would be required to continue contributing toward the cost of health coverage, but would not directly provide insurance, thus limiting employers’ exposure to the annual double-digit inflation rate hikes in health-care costs.

During the first two years of the plan, employers who currently provide benefits would be required to directly pay workers the amount they were spending on health-care insurance. After that, most companies would directly pay the government a health-care contribution, similar to a payroll tax. Employees would use the money from their employers to purchase private policies through state insurance purchasing pools, and the plans would have benefit mandates similar to the plans available to federal employees. Premiums for the poor would be fully-subsidized by the government, and the uninsured would also be required to buy coverage.

It is estimated that while this plan would keep health-care inflation increases down because individuals would have to pay more for benefit-rich plans, such a complex broad reform package may lack the support necessary to pass.

In response to a request from Wyden’s office in October, IFA submitted comments about small-businesses’ struggles and preferences on health-care policy. IFA views Wyden’s proposal as a first step that will play a foundational role in the health-care debates of the new Congress. IFA continues to work for affordable health-care insurance benefits for small-business employees and their families.

ILLINOIS FURTHER HIKES MINIMUM WAGE RATE

On the heels of the November elections, when six states voted to increase their minimum wage, Illinois has further increased its own starting wage. On the last day of its legislative session, the Illinois Senate voted Nov. 30 to increase the state’s base wage from $6.50 to $7.50 per hour. As the leader of the wage increase effort, Illinois Gov. Rod Blagojevich(D) indicated his willingness to sign the bill.

The legislation also increases the minimum wage by an additional 25 cents per hour in each of the following three years, ultimately reaching $8.25 per hour in 2010. The measure includes a provision that allows employers to pay 50 cents below the minimum for teen-age workers and trainees in the first 90 days of employment.

IFA expects further efforts to increase state wage rates as legislators convene their 2007 sessions, with a particular focus on the inclusion of tying the rate to the Consumer Price Index.

On Dec. 1, the US Department of Labor published a notice in the Federal Register seeking input from the public on changes to the Family and Medical Leave Act. Implemented in 1993, FMLA has not been revised in more than a dozen years and DOL would like to ascertain the effectiveness of the current implementing regulations. Comments must be received by Feb. 2.

The FMLA entitles eligible employees of covered employers to take up to a total of 12 weeks of unpaid leave during a 12-month period for the birth of a child; for the placement of a child for adoption or foster care; to care for a newborn or newly-placed child; to care for a spouse, parent, son or daughter with a serious health condition; or when the employee is unable to work due to the employee’s own serious health condition. Employers covered by the law must maintain for the employee any preexisting group health coverage during the leave period and, once the leave period has concluded, reinstate the employee to the same or an equivalent job with equivalent employment benefits, pay and other terms and conditions of employment.

IFA encourages members to review the notice at the agency’s Web site, www.dol.gov and either provide comments to DOL or make any concerns known to IFA’s Government Relations staff. Based on member feedback, IFA will determine whether to submit comments.

For information, contact IFA’s Government Relations staff at 202-628-8000.

MIAMI BEACH EXPO OPENS JAN. 19

One hundred fifty exhibitors know a prime opportunity exists to attract a steady stream of visitors when the Franchise Expo South comes to the Miami Beach Convention Center Jan. 19-21.

Franchise companies and suppliers will start off the New Year by displaying the wide array of brands and services. Exhibitors should be prepared to field questions from prospective franchisees and explain the advantages and challenges of franchising.

The educational portion of the expo will offer attendees courses to help better operate their franchised businesses through financing alternatives, expansion and marketing strategies. Those new to franchising can participate in free specialty seminars designed especially for military veterans, women and minorities.

IFA has recently launched the new Franchise.org. One of the first things visitors will notice is the fresh look. The association worked with Supplier Forum member Aviatech to create a new experience for the thousands of people visiting the Web site every month.

A new feature of the Web site is a Member Log-in area which can be accessed by selecting the green Member/Business Resources tab. The Member Log-in provides access to the following items: tracking leads received from Franchise.org; the ability to upload company press releases to appear along with members’ listings; view and pay association membership dues and advertising, view and update company contact information and company listings that appear in the Franchise Opportunities Guide and on the Web site.

To log in, visit the Member Log-in area located on the Member/Business Resources tab at Franchise.org or go to http://members.franchise.org. Next, enter the member ID number and password that was recently e-mailed and mailed to the company’s main contact. Once on the site, make sure to update the company’s listing which appears on the IFA site and in IFA’s Franchise Opportunities Guide. Unlike in the past when association members were limited to submitting changes, the entire listing appears just as it does online and any changes made are automatically included within 24 hours. This information is then used as text that is published in IFA’s Franchise Opportunities Guide. All updates are due by Jan. 12.

To obtain member log-in information or to resolve log-in problems, contact the IFA Membership Department’s Paul Rocchioat procchio@franchise.org or 202-662-0790 or Connie Grecoat cgreco@franchise.org or 202-662-0765.

SELF-REGULATION CLICKS WITH ONLINE ASSISTANCE

To review programs that are designed to assist in building positive franchise relationships, visit Franchise.org. There, visitors may review some of the components that make up the association’s Self-Regulation Program, which includes the IFA Code of Ethics, Ombudsman and conflict-resolution resources.

Visitors may also participate in an online course, “Franchising Basics,” and learn how to participate in franchise sales compliance training. The free “Franchising Basics” course describes how franchising works as a business model, offers suggestions of questions to ask during the investigation process, describes laws and regulations that apply to franchising, notes the companies and types of businesses that comprise the franchising sector, describes the advantages and disadvantages of franchising, discusses the different forms of franchising and suggests sources of additional information. The “Franchise Sales Compliance” online course addresses such topics as disclosure laws, earnings claims, negotiated transactions, penalties for non-compliance and technology issues.

DIVERSITY, ADVERTISING DIRECTORS JOIN FRANCHISE ASSOCIATION

The IFA’s Educational Foundation has named Miriam Breweras director of development and diversity initiatives. Prior to joining IFA, Brewer gained more than 15 years of experience in association management with special training in diversity management. She most recently served as associate director, diversity/inclusion outreach for the Alzheimer’s Association, spearheading a program for the national office and local chapters. In her new role, Brewer is charged with developing programs and services to assist IFA-member companies in expanding their diversity recruitment and multi-cultural marketing efforts for franchisees, employees, suppliers and consumers.

Bill Burrisjoined the association as director of advertising and marketing. Burris is responsible for the management and sales of advertising and marketing for IFA’s publications and Internet business including Franchising World, the Franchise Opportunities Guide, Franchise.org and IFA SmartBrief. He will be working with Regional Advertising Managers Nancy Kneibertand Kelley Classand Advertising Assistant Laura Pirog. Burris was most recently publisher of Gases and Technologymagazine and prior to that was with PennWell Corp. where he was associate publisher of CleanRoomsmagazine.

For those using the Internet to track trends, locate new information and collect statistics about the franchising sector, begin your search at the IFA Web site, Franchise.org. Below are links to access events, programs and facts about the sector.

The IFA 47th Annual Convention is expected to draw thousands when it begins Feb. 24 in Las Vegas. Concurrent sessions about marketing to the female consumer, assessing franchise candidates, international expansion and a private-equity discussion with CEOs are among the dozens of seminars and roundtable discussions designed to fit the needs of participants whether they are new to franchising, experienced in the sector or first-time attendees.

Reports are available from the IFA Educational Foundation and FRANdata Profile of Franchising 2006 series, the IFA-PricewaterhouseCoopers’ Economic Impact of Franchised Businesses and more to help answer questions about the positive contributions of the sector.

Military veterans, minority students, graduating high-school students, minority law students and entrepreneurs can select from programs and scholarships designed to provide educational assistance for those pursuing a career in franchising.

Franchise systems can find help in locating experts familiar with franchising in such areas as accounting, background screening, direct mail, manuals, security systems and telecommunication by browsing the IFA Supplier Directory.